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Committee Examines Onerous Licensing Barriers for Entrepreneurs

FTC Official Testifies about Enforcement of Anti-Trust Laws to Promote Competition

The House Small Business Committee, under the chairmanship of Rep. Sam Graves (R-MO), today examined the barriers that certain state licensing requirements impose on entrepreneurs and individuals seeking economic opportunity, and how the Federal Trade Commission (FTC) can utilize advocacy and enforcement of federal anti-trust laws to prohibit anticompetitive regulations.

On March 26, 2014, the Subcommittee on Contracting and the Workforce held a hearing with testimony from entrepreneurs who encountered licensing obstacles to starting small businesses, even when those licenses did not directly apply to their business ideas or protect public health and safety. Today’s second hearing expanded the Committee’s examination of these challenges by looking at the FTC’s role in combating onerous licensure through the enforcement of federal anti-trust laws that promote competition. Andrew Gavil, Director of the Office of Policy Planning, Federal Trade Commission, testified.

“Sixty years ago, only 5 percent of occupations required state licenses. Since then, the number of occupations subject to these requirements has soared to nearly 30 percent, and in many cases, these rules impose a significant regulatory burden on small businesses and entrepreneurs,” said Chairman Graves. “Licensing regulations create barriers to work that disproportionately affect lower and middle-class Americans. As state licensing boards are typically comprised of people from that profession, their decisions about who can enter their profession can reduce competition. It is important that these regulations are narrowly tailored to provide a public benefit without unfairly limiting opportunities. As the Committee continues examining ways to reduce barriers to entrepreneurship, the FTC’s testimony today was insightful regarding the agency’s role in protecting a free market.”

Materials from the hearing are available on the Committee’s website HERE.

Notable Quote:

Andrew Gavil, Director, Office of Policy Planning, Federal Trade Commission, Washington, DC, said, “[Licenses] can protect consumers from actual health and safety risks and support other valuable public policy goals. However, that does not mean that all licensure is warranted and, most importantly in our experience, it does not mean that the benefits of all of the specific restrictions imposed on occupations are sufficient to justify the harm they can do to competition and mobility in the workforce. We have seen many examples of licensure restrictions that likely impede competition and hamper entry into professional and services markets, yet offer few, if any, significant consumer benefits. In these situations, regulations may lead to higher prices, lower quality services and products, and less convenience for consumers.”

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